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Fun Silly Toys (FST) produces a number of space themed toys (e.g., astronaut action figures). One of the newer divisions at FST is the board

Fun Silly Toys (FST) produces a number of space themed toys (e.g., astronaut action figures). One of the newer divisions at FST is the board game division, which currently produces and sells one product: Rocket Exploration.

FSTs financial analyst is currently working on preparing the budgets for the next fiscal year. She has forecasted monthly unit sales, based on a sales price of $33/unit, as follows:

January

18,800 units

February

17,400 units

March

17,900 units

April

19,100 units

May

18,400 units

June

18,200 units

July

16,600 units

August

15,900 units

September

16,300 units

October

17,200 units

November

19,400 units

December

21,800 units

Total Sales

217,000 units

To smooth production, FST is planning to produce 20,000 units per month every month.

FST uses variable costing and FIFO to value inventory and determine cost of goods sold. At the beginning of the year it is expected that the beginning finished goods inventory will be valued at $103,750 (5,000 units). FST does not maintain any work-in-process inventories.

The production standards for one unit of Rocket Exploration are as follows:

Usage

Resource Cost

Direct Materials

1.80 lbs / unit

$6.00 / lb

Direct Labor

0.25 hrs / unit

$18.00 / hr

Variable Overhead

0.60 MHrs / unit

$10.00 / MHr

Regarding the direct materials, FST has a policy to hold 25% of the next months raw material requirements in their ending raw material inventory. At the start of the year, FST only had 8,000 lbs on hand (valued at $48,000). All materials are purchased on account, and are paid in the month following the purchase (FST is expected to have beginning accounts payable of $193,800). For the following fiscal year, FST is planning to increase production to 22,000 units per month.

FST expects to incur $2.50 per unit in shipping costs, $900,000 in fixed manufacturing overhead (of which $210,000 is depreciation) and $625,000 in fixed non-manufacturing costs (of which $35,000 is depreciation).

FST knows that typically 50% of their sales are for cash, and 50% are on account. Of the sales on account, 50% are typically collected in the month following the sale, 30% are collected two months following the sale, and the remaining 20% are collected three months following the sale. FST expects beginning accounts receivable to be $464,000.

FST expects to begin the year with $15,000 in cash.

Determine the expected ending accounts payable balance.

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